Slideshow 'Launderers Will Keep Having Field Days': Comments of the Week

Published
  • March 05 2015, 4:00pm EST
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American Banker readers share their views on the most pressing banking topics of the week. Comments are excerpted from reader response sections of AmericanBanker.com articles and from our social media platforms.

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On the need for banks to be on the lookout for trade-based money laundering:

"The key issue for bankers is that few bother to look below the waterline of the identity iceberg. Due diligence often consists of relying on dubious IT and databases, as opposed to proper use of human intelligence. Until bankers change their approach, launderers will continue to have a field day."

Related article: One More Money Laundering Problem for Banks to Worry About

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On state bank supervisors' recommendation that lawmakers end regulatory exemptions according to asset size and adopt a formal definition of community banks:

"It is about time that this arbitrary '$10B bright line' was eliminated, and the regulations for community banks were based on the actual risk control appropriate for the institution's risk profile. One of the unintended consequences of these regulatory thresholds is to create $9B community banks, afraid to grow past the $9.9B line."

Related article: Asset Thresholds Complicate Bank Regulation, State Supervisors Argue

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On the argument that state-owned banks are too easily corrupted by political influence:

"At least the public banks can be made transparent by enforceable laws. That is not true of TBTF banks."

Related article: Promises of Public Banks Don't Match Reality

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On the deficiencies of Federal Reserve stress tests:

"The saddest part of current stress tests is that these only test for what is on the balance sheets of banks, without giving any consideration to what should be on and is not."

Related article: How the Stress Tests Have Reshaped Banking Supervision

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On the argument that another government bailout could be required unless regulators figure out how to allow big banks to fail without risking a run on the OTC derivatives market:

"The author doesn't mention the role of derivative clearing houses in the entire system, but they pose the same problem: how do you keep them afloat in a serious financial crisis?"

Related article: Global Bail-In Plan Could Still Leave Taxpayers Holding the Bag

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On the areas of the financial industry that continue to threaten the stability of the system:

"Grossing up real estate prices to cover debt through asset inflation is blighting the built environment and degrading the good faith in markets while avoiding the inherent liquidity risks; but that is on the ground. Up in the towers, it's only the OTC derivatives that make real estate/asset speculation look tame by comparison."

Related article: Global Bail-In Plan Could Still Leave Taxpayers Holding the Bag

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On a Stanford study that found people tend to save more when they feel powerful:

"To get people to save, insured depository institutions need to start paying depositors reasonable rates … If the prepaid card-based Virtual Bank Accounts offered by most check cashing outlets can pay 5% on savings, why can't banks and credit unions do the same?"

Related article: Put Some Power into 'Financial Empowerment'

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On the news that Citigroup forgot to send checks to 23,000 borrowers who were owed money as part of its $10 billion robo-signing settlement:

"More evidence that this and other huge banks are too big to manage. With all of the attention to Citi's role in the mortgage crisis and subsequent settlements, wouldn't you think they'd be extra careful to get this right?"

Related article: Citigroup Checks in the Mail After Bank Bungles Foreclosure Deal

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